Occupy The Farm: Agribusiness Thrives with Wall Street’s Support
In July of 2011, Jim Rogers, investment whiz, best-selling author and one of Wall Street’s towering personalities, gave this advice: If you want to become rich, become a farmer. He predicts that farming incomes will rise dramatically in the next few decades, faster than those in most other industries – even Wall Street. “We don’t need more bankers,” Jim said. “What we need are more farmers. The invisible hand will do its magic. The world has a serious food problem and the only way to solve it is to draw more people back into agriculture. Farmland has emerged as one of the hottest investments on Wall Street.”
Before you cheer for the local food movement, it is imperative to understand that this Wall Street insider is championing large, mono-cropping, not-always-edible agriculture – the kind that plants untold acres of ethanol corn whose seeds come from Cargill or Monsanto that requires untold gallons of specially formulated herbicides and pesticides, for example. Is this what he means by the “invisible hand?”
When the dot-com bubble burst in 2000, investment cash began to trickle into an area that had for decades seemed stodgy and boring: food commodities like corn, soy, and rice. And after the housing market started to unravel in 2006-'07, that trickle turned into a gusher.
How did the global food supply become a Wall Street profit center?
According to Frederick Kaufman, the history of food took an ominous turn in 1991 at a time when no one was paying attention. Until that point, agriculture had not traditionally engaged the attention of Wall Street bankers, whose riches did not come from the sale of real things like wheat or bread, but rather from the manipulation of ethereal concepts like risk and collateralized debt. In 1991, food was the only remaining business that could not be recast as a financial abstraction. So, with accustomed care and precision, Goldman Sachs’ analysts went about transforming food into a concept. They randomly selected 18 commodifiable ingredients and contrived a financial elixir that turned edible food into a mathematical formula expressed as the Goldman Sachs Commodity Index. They began to offer shares. Not only did our food got to market for sale, the entire industry became buyable by large corporations with a nod and a cheer from Wall Street.
In antitrust theory, when four players control more than 40 percent of a market, they're said to wield "market power"—that is, they can manipulate the prices they charge consumers and the terms on which they deal with their suppliers. So, rather than raise prices, the food industry has slashed costs—at the expense of workers, farmers, and the environment.
According to Mother Jones, farmers rely on a small handful of firms for their inputs. But it turns out the same thing holds true when they harvest and sell their crops. Just four companies—Cargill, Archer Daniels Midland, Bunge, and Louis Dreyfus—control up to 90 percent of the global trade in grain. In the United States, three of those firms process 70 percent of the soybeans and 40 percent of the wheat milled into flour. The bulk of corn and soy grown by US farmers ends up feeding animals in vast factories, and here, too, the consolidation is dramatic: Three companies now process more than 70 percent of all beef, and just four firms slaughter and pack upwards of 58 percent of all pork and chicken.
Wall Street LOVES Big Agriculture Industrial Byproducts
This fall, Archer Daniels Midland has ramped up construction on an initiative to build an underground carbon sequestration facility . This would make the United States the world leader in underground carbon sequestration by injecting polluted carbon dioxide gasses emitted from an ethanol facility in Illinois into porous rocks in deep saline rock reservoirs thousands of feet underground. By 2013, Archer Daniels Midland (ACM) expects to inject 3.5 million tons of CO2 underground each year.
It’s these types of environmentally risky and untested, potentially dangerous projects like these that make investors and Wall Street really happy! We have already given, without our direct knowledge, $141 Million our tax dollars to this project, and ACM already has their hand out demanding more. As the 2012 Farm Bill comes to the floor of the White House and into the daily transactions of Wall Street, you can be assured that it is projects like these that will receive a majority of funding.
The financial question is this: if a large corporate agricorporation owns the topsoil on large tracts of land, do they also own the space thousands of feet underground beneath it? If the answer is yes, you can also be assured that farmland preservation will turn its attention to protect these large tracts of land owned by the companies who own the intellectual property rights of the seeds planted in the 8-inches of topsoil on top.
Whether underground carbon sequestration projects are good or not good, whether you buy the argument that sweeping our emissions under the rug is a good environmental approach, and whether or not you understand that regardless of this project works or not (I’m glad I don’t live in Illinois) in flat lands on the Midwest, it won’t work in the mountainous terrain of coal country (whatever “works” means), the bottom line is that supporting big corporate agriculture is NOT supporting farmers.
Wall Street’s Love Affair with Corporate Agriculture Will Skew the Farm Bill to Indirectly Hurt Small Family Farms
Typically, passage of the Farm Bill occurs every five years and involves a lengthy process of hearings, constituent meetings, and (sad but true) many a high-priced meal on the tab of some lobbyist or other—followed by detailed negotiations between the House and Senate Agriculture Committees. It has also often been seen as an opportunity to—as one recent action alert put it—change the food system by supporting small farms, investing in rural economies, and “supporting more diversified farming and livestock systems, healthy food access, conservation, and research.”
The next reauthorization was not expected until late in 2012—if not 2013—but through an unexpected turn of events, it may be decided much faster, and with even less input from the good food movement than the last one.
And when I say faster, I mean at warp speed. Earlier this week, according to the National Sustainable Agriculture Coalition, the House and Senate Ag Committees suddenly announced that they would write the entire 2012 Farm Bill in the next two weeks. The prospect of a small group of negotiators who are not beholden to traditional farm interests working behind closed doors to slash farm spending might strike some as a sign that our long national industrial agriculture subsidy nightmare is over. But as Ken Cook, president of the Environmental Working Group (EWG) and an advocate for farm subsidy reform, said “it’s likely that we will get a ‘secret farm bill’ with ‘no accountability.’”
No one knows exactly how it will turn out. According to Grist, “there are people betting on all” possible scenarios. But one thing is certain; negotiators are desperately trying to maintain the annual flow of $18 billion in subsidies to the largest farmers who produce commodity crops like corn, soy, and cotton. This is reflected in the proposals currently circulating in Congress, specifically over a set of subsidies known as “direct payments.” Originally designed as a temporary means to get around World Trade Organization restrictions on government support of private industry, direct payments go to large farmers based on past farm yields and acreage.
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